# How to sell a home

There are many good reasons to sell a house.

A. You bought or inherited a house you can't afford.

- If the housing market changes, you might have an upside-down loan (owing more than your house is worth).
- A short sale sells the house for less than it's worth, but considers that sale as full payment on the loan.
- Simply abandoning a mortgage without paying is called a strategic default, and is completely [unethical](morality.md) because you're breaking your promise.

B. You're no longer satisfied with the house or your lifestyle needs have changed.

- [Your family](parenting-babies.md) is now too big for your house.
- The house has become [too much trouble to maintain](home-housekeeping.md).
- Now that [the children moved out](parenting-3_teenagers.md), the house is too big.
- The house has too many [painful memories](hardship-ptsd.md) attached to it.

C. The house is too expensive to maintain.

- [New work opportunities](jobs-1_why.md) require you to frequently travel far away.
- [Your child](parenting-children.md) would benefit from a better school district.
- The house is worth more than you owe on it, and you'd like to [reinvest](money-investing.md).

When you want to sell, think like a retailer.

- Most people act on their feelings through the whole experience and are usually unprepared.
- Treat it as a business transaction that requires [marketing](marketing.md), [haggling](people-5_conflicts.md), and awareness of [agreements](people-6_contracts.md).

## A. Immediately shop for a realtor

Unless you are sufficiently experienced in real estate [sales](marketing.md), a great real estate agent is *absolutely* worth the cost:

- They can expose you to many more potential buyers through their MLS.
- A good real estate agent [sells more](marketing.md) houses in a week than you will in your *life*.
- You'll likely sacrifice a 6% commission for a 10% increase in the selling price.

Before deciding, interview at least 3 agents:

- Only trust friends or family to sell if you don't really care whether they do a good job.
- Do *not* sign an elaborate listing contract where *you* can't leave it, but *they* can.
- Keep in mind that some agents charge additional marketing fees beyond the house's commission.

A great realtor has *very* specific qualities:

- Has 4+ years of experience and sells 35+ homes each year.
- Has an average list-to-sale ratio over 100%, which means they consistently get above asking price on each sale.
- Has an average time-to-sell similar to your area's standard rate.
- Knows the area (which isn't a deal-breaker if the realtor is fantastic).
- Outlines what [marketing](marketing.md) will work and how If you bring up something for the market they're appealing to, they should explain to you why they won't use it.
- Will honestly tell you what you need to hear.
- Will work harder when issues arise.
- Ask for references, since they should have a long history of satisfied customers.

Observe their communication skills:

- Promptly returns phone calls, ideally within a day.
- Expresses their point [politely](people-3_boundaries.md) and [quickly](language-speaking.md).
- Patiently explains their methods and the industry's processes.
- Firmly grasps information about the industry.

## B. Accurately value the house *before* listing

Note the housing market:

- Are houses in your neighborhood selling quickly?
- Have house values in your area shown consistent growth?
- Is your estimated house value trending up or down?
- How does your house value compare to the rest of your city?
- Expand your search to look for nearby current listings, recently sold houses, and foreclosures.

To sell faster, time the listing during the winter.

Unless you're a professional specializing in house values, do *not* try to figure out your selling price by yourself:

- Emotional Equity: the difference between what a house's owner feels their house is worth and its actual worth.
- Don't include your sentiments or add your new home's costs into your house value.
- Depending on your situation, you might also have to settle for a lower price during [negotiation](people-conflicts-negotiation.md).

Don't try to "test" the market by setting the price above market value:

- You'll have the house on the market for an uncomfortably long time.
- When you list it on the internet, nobody will even *consider* it without an appropriate price.
- The lower your price, the faster you'll sell.
- If the price is below market, you may draw potential buyers into a bidding war.
- If you're willing to take the risk and want to sell it quickly, consider putting it up for auction.

Ask your realtor do a free Comparative Market Analysis (CMA):

- A CMA compares nearby homes currently on the market and sold within the past few months.
- Its purpose is to find the price of houses with similar size, bedrooms, exterior, interior, and location.

Before committing to sell, analyze how much you'll profit:

1. Take the market value from the CMA and subtract the balance left on your mortgage.
2. Take closing costs off that amount, which are usually 6-10% of your house's value.
3. Subtract the approximate cost of [moving](home-moving.md) and storage fees.

Ideally, [budget](money-3_budget.md) your cash flow to address expenses *before* they come:

- Repair and improvement costs
- [Moving](home-moving.md) costs
- Potential closing costs
- New home costs

## C. Mentally prepare to sell

For several months, you'll be slightly inconvenienced in your own home.

You *will* become [less happy](mind-feelings-happiness.md), so remember *why* you're selling.

Avoid taking on more responsibilities like a [job change](jobs-1_why.md) or [getting married](relationships-weddings.md).

To avoid extra stress, try to arrange a home sale contingency if you already have a home:

- A sale and settlement contingency means you haven't found a buyer yet and are [marketing](marketing.md) the home, which isn't that attractive to potential sellers because it has many potential snags.
- A home settlement contingency is when your home is already [under contract](people-6_contracts.md), is in escrow, has a home inspection, and is moving toward a closing date, and sellers tend to like the arrangement pretty well.

If you haven't found another house by the time you're considering selling, find a rental property with a short-term lease as a backup or in-between instead of backing out of the deal entirely.

- You've already come this far, so [moving out](home-moving.md) to a new place is an ideal way to embrace a new [chapter](people-changes.md) of your life.

## D. >1 month before listing

Ask your realtor where your money will matter most:

- The most significant repairs keep the electrical, plumbing, HVAC, and roof in excellent condition.
- Your most significant *cosmetic* improvements will be toward the living room, kitchen, dining area, and master suite.

Make all the necessary minor fix-ups and repairs, since you'll make *enormous* investment returns and will sell almost twice as fast.

Hire a home inspector to identify issues *before* they might ruin the deal during escrow.

Paint the house.

- Painting is one of the most cost-effective ways to increase the value of a house.
- Make the main entryways look good.
- Make the whole house have a matching tone, preferably a neutral color, to maximize appeal to the most people.
- Pay particular attention to the outside which faces the street, especially the trim and stucco.
- Paint all cabinets and walls.

Replace or upgrade everywhere around the house.

- Update the flooring, especially the carpets, or hire a professional to deep-clean the rugs.
- Improve, install or update the light fixtures, especially over the dining room.
- Create a batten wall or add baseboards.

Improve the kitchen.

- Kitchen repairs are usually the most profitable.
- Consider granite/marble countertops, or at least replacing the current counters.
- Put new hardware on the cabinets, or get new doors and veneer.
- If you can, make the kitchen match the bathrooms.
- Replace the sink with a modern one.
- Put in new appliances.

Improve the bathroom.

- Put new hardware on the cabinets.
- Update to modern faucets.
- If you can, try to make it match the kitchen and other bathrooms.
- Replace the towel racks and other accessories like the shower curtain.

Make the outside more inviting.

- The most important aspect of preparation is curb appeal (how it looks from the street).
- Improve the landscaping.
  - Prune bushes, trim trees, add color with flowers.
  - Add fresh mulch or wood chippings, put a giant pot of flowers by the front door.
  - Pull any weeds, water the plants.
  - If you're in a dry climate, install drought-tolerant plants.
- Add to the outside.
  - Replace the entry door.
  - Repair or replace the garage door.
  - Create crown molding.
  - Add a corrugated steel privacy fence.

Add legal living space.

- Add an extra room or a shed.
- If it's an older house, add a laundry area.
- Look for dead space in between rooms.

Build "accessories" for the house.

- Build a bookcase into a wall.
- Install an upholstered bench into a stair landing.
- Make an extra closet with bookshelves and tension rods.

Update the laundry space.

## E. 1-2 weeks from listing

Make the house look inviting, as if someone lives in it, but that there's room for someone else to move in.

- Potential buyers and appraisers should see the house as their home.

Put away *all* non-routine items.

- The more things you store away, the more spacious the house will feel.
- Move everything possible to a storage unit.

Rearrange and put away furniture.

- Place nice patio furniture out.
- Arrange the furniture with conversation (not TV-watching) in mind.
- Store any bulky furniture in the bedroom if you must keep it in the house.
- Remove most of the linens from the linen closets.

Replace, remove or put a slipcover over worn-out furniture.

Replace all the lights with brighter ones.

Put on new bedding and throw pillows.

If the house is vacant, make it look like someone lives there.

- Lightly stage the important rooms.
- Have lawn and cleaning services take care of the house if you can't.

## F. 1 week before listing

To make every room look as large and expansive as possible, [clean everything](home-housekeeping.md) immaculately.

- Scrub every surface to a shine.
- Clear every window, door, surface, closet, and cabinet of debris or clutter.

Hire a professional photographer.

- Your realtor should know a good photographer.
- Professional photos will frame the house with the best possible angles.
- Many potential buyers won't even *consider* a house without a set of good photos.
- If it makes sense for the image you want, also hire a professional videographer for a more pronounced presentation.

Change small details everywhere to make the house more appealing.

- Open up all the windows and drapes to let in light.
- Living room:
  - Set new throw pillows on the sofa.
  - Add a vase of flowers on the coffee table.
  - Since they don't photograph well, don't scatter rugs around any rooms.
- Kitchen:
  - Set the dining table with the best dishes, flatware, and linens.
  - Keep the counters sparse and spacious.
  - Have a few trendy-looking stainless-steel appliances out.
- Bathroom:
  - Close the toilet lid.
  - Hide the laundry hamper and any personal towels.
  - Put clean ornamental towels on the towel racks.

## G. When people arrive, they should fantasize being "home"

The house should look as reasonably close as possible to the photographs.

Strike a balance between "for sale" and "inhabited":

- Put things away as soon as you're finished with them.
- Have a small to-do list for any prospective buyers stopping by.
- Have your [pets](fun-pets.md) live somewhere else until escrow opens.
- Keep your children out of trouble and [motivate them](parenting-children.md) to help with everything.

Before the buyers come, bake something that smells pleasant or burn scented candles.

## I. Prepare for a long negotiation process

Each state has a different type of contract phase, so make sure your realtor knows how that state performs it.

A. the potential buyer will give an initial offer:

- Give preference to a buyer pre-approved for a mortgage, since the deal may fall through without it.
- Until you make a deal, the numbers don't matter, so be prepared for hard-hitting [negotiations](people-conflicts-negotiation.md) over the house's value.
- Every potential buyer will want to [save money](money-4_spending.md), so they *will* bring up problems with the house you'll need to explain.
- Offering a home warranty will not typically close the sale, but consider it if the buyer wants it.
- Stay fully aware of the details of *any* [papers you sign](people-6_contracts.md), especially:
  - Purchase price
  - Closing or escrow date
  - Special allowances for personal property, home improvements, and closing costs
  - Contingency deadlines for the home
  - Inspection, appraisal, and buyer financing
  - Other contingencies like the buyer's home sale contingency
- Track the entire dollar amount you'll end up spending.
- Don't take a low offer personally, since it's still an opportunity to sell your house.

B. after the initial interest and agreed-upon deal, the potential buyer will have a home inspection:

- The buyer will typically have an inspection independent of yours, and it's not uncommon for that inspector to detect issues your inspector(s) hadn't found.
- To cover repair costs, either offer cash at closing or a discount on the sales price.
- Sometimes, depending on the buyer's loan, the appraiser may require certain repairs done.
- Have your realtor negotiate with the buyer to see if you can meet the buyer in the middle.
- If the buyer expects you to fix it, it's usually better to hire a contractor your realtor knows instead of risking the buyer demand a re-repair.
- If a title search uncovers an open lien on the property, you must either pay for it or use your title [insurance](money-insurance.md).

C. the potential buyer will make an appraisal:

- Make a detailed list of improvements to the home and prove it with invoices or receipts.
- Have your real estate agent provide well-researched comparables to support your sales price.
- On appraisal day, keep the house in pristine condition.
- If the appraisal is lower than your selling price you have several options:
  1. Your agent can dispute a questionable assessment.
  2. Drop your contract price.
  3. The buyer can bring the difference in cash.
  4. You and the buyer meet somewhere in between.
  5. Leave the deal.

D. the buyer will arrange a loan commitment:

- At this point, your realtor should be proactive.
  - Contacting the buyer's lender to push the approval process forward.
  - Investigating anything that may risk endangering the deal.
  - Connecting the buyer with an alternate lender if the first one pulls out of the deal.
- If the buyer cannot secure financing for any reason whatsoever, leave the deal.

## Once you've sold your house, move as soon as you can

Keep the buyer informed about when you're moving and what stays with the house.

Make sure escrow closes on the house before you start moving.

- Expect the best, but be prepared for the worst.

On closing day, bring a photo ID and the house keys.

Keep your end of the agreement and leave on a positive note with the buyer.

Walk yourself through it with a [moving checklist](home-moving.md).

## Pay down your mortgage as soon as possible

Technically, a mortgage can allow the bank to repossess the property if you *ever* stop [paying it](money-2_debt.md).

Work as fast as possible to pay the mortgage down to 80% of the home's value, which involves doing several things at once:

1. Make a [routine](https://adequate.life/habits/) of as much over-payment as you can manage.
2. Add [renovations and improvements](home-decorations.md) that will add *more* value to the house than paying down the loan dollar-for-dollar.
3. When the housing market next peaks, have an appraiser value the home again and refinance.